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a. Use (draw graphs) the money demand and money supply model and the AS AD framework to explain the impact of an open market sale

a. Use (draw graphs) the money demand and money supply model and the AS AD framework to explain the impact of an open market sale on the interest rate, real GDP and prices.

b. Use the loanable funds model to illustrate and explain (briefly) the effect of higher capital income tax on the real interest rate and savings and investment.

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